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ARTICLE · 07 FEBRUARY 2023

A refresher: relevant principles on leave applications to proceed against a bankrupt

Leave applications to proceed against a bankrupt debtor pursuant to section 58(3) of the Bankruptcy Act 1966.

AustraliaInsolvency/Bankruptcy/Re-Structuring

Ordinarily, a creditor that has a "provable debt" will proceed against a debtor who has been made bankrupt via the proof of debt process in the bankrupt estate. However, in certain circumstances, leave may be granted to a creditor to commence proceedings against the bankrupt debtor pursuant to section 58(3) of the Bankruptcy Act 1966 (Cth) (BA).

In Mableson v Tarbotton, in the matter of the bankrupt estate of Tarbotton [2022] FCA 1433, the Liquidator of ACN 050 019 960 Pty Ltd (in liq) (Company), successfully applied for leave to commence proceedings against the directors of the Company, Mr Tarbotton and Mr Vieceli, who had each become bankrupt, for breach of insolvent trading laws under section s588G of the Corporations Act 2001 (Cth) (CA) and for relief under section 588M(2) CA,1 as against:

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